Old Business Model

Most pipers are very familiar with the Old Business model since the vast majority of pipemaker's follow it. I am certainly not second-guessing their decisions. However, I have long been uncomfortable with this particular way of doing business. Many years ago I developed some concerns regarding the dangers this model inherently possesses. With the recent deaths of some very fine instrument makers in the last few years these fears have only been proven. My own personal tragedies have only served to highlight these dangers.

In the Old Business model an interested party would begin a relationship with an instrument maker and eventually place an order. Placing an order usually required a 50% deposit. This deposit guaranteed the customer's seriousness and committment and guaranteed their "place" and "order" on the waiting list. This deposit served as the pipemaker's living wages and funds used to purchase any needed materials and any operating overhead for the business. The remaining 50% was due upon completion.

So, what were the problems?

1. One of the problems with this model was that in times of inflation, the pipemaker tended to suffer. As prices and costs rise, the original purhase was frozen in time. While this is not a concern for the buyer, it is a concern for the maker.

2. What if the customer changes their mind or has a major change in their economic situation. Some might say "too bad" and chalk things up to buyer's remorse. But in reality this is a serious situation. If the buyer is unable or unwilling to fulfill their committment the pipemaker is left in a very tenous position. They have likely spent a great deal of time and money on a very customized instrument. Other customers have had to wait additional time while the first instrument was made.

3. What if the pipemaker dies? Obviously there will be numerous uncompleted instruments who will never have an owner. What happens to the numerous customer deposits? If the pipemaker has needed these funds as a living wage, the widow may be faced with the prospect of refunding money she simply does not have!

4. If a pipemaker faces a situation where they are forced to cancel orders they will likely face a rather substantial amount of debt...especially if the deposits had been used to provide living wage.